 Good afternoon. Welcome to the New America Foundation. I'm Peter Bergen. I run the National Security Program here. Really a pleasure and honor to introduce John Sobko, who's the Special Inspector General for Afghanistan. He's had a distinguished career both on the Hill and also in private practice. He was at Akin Gump before he took up his most recent job as Cigar. Long career on the Hill, Chief Counsel for Oversight and Investigations for the House Committee on Energy and Commerce, working chair by John Dingle, worked as Chief Oversight Counsel for the House Select Committee on Homeland Security, worked for Sam Dunn when he was on the Senate Subcommittee on Investigations, has had a distinguished career as a state and federal prosecutor, as a trial attorney with the U.S. Department of Justice, and will talk to you today a little bit about his recent findings. In Afghanistan, he goes there about every two months and is going to be leaving shortly for another trip, and he will speak for about half an hour, then I'll engage him in a little bit of Q&A and then throw it open to you. Thank you, sir. Good afternoon, and I want to express my gratitude to the New America Foundation for inviting me to speak today, and I want to acknowledge the commitment to new ideas and new approaches as we face the challenges of the 21st century, just like you do. Given the many challenges we face at home and abroad, and especially in Afghanistan, everyone must commit themselves to impartial analysis and pragmatic solutions, like both CIGAR and the New American Foundation strive to do. And I want to thank Peter for the kind introduction. I especially want to recognize his incredible contribution to our knowledge of terrorism and the counterinsurgency efforts. While the impending end of the U.S. combat mission has led some to erroneously believe that our involvement in Afghanistan is waning, Peter's continued focus on that area of the world is needed really more than ever, and we need his expertise to help guide the United States through to many challenges we will face during this transition and beyond. Today I'd like to talk about those challenges. In CIGAR's latest quarterly report, which we left out at the counter when you came in, we issued it last week. I explained why I believe the United States and its allies are entering the most critical phase of the reconstruction effort in Afghanistan. As the United States and our coalition partners begin to pull out combat troops, the Afghan government must assume greater responsibility for its own country's future. The continued success or failure of the U.S. mission will depend on whether the United States and its international partners have adequately prepared the Afghans to handle four key transitions. The security transition, the economic transition, the political transition, and the transition to increased direct assistance. Let's begin with the most important element first, and that is security. Why is it so important? The answer is quite obvious. Without adequate security, meaningful progress in Afghanistan is not possible. The reconstruction would come to a halt. The Afghan state could not defend itself from terrorist threats. Afghanistan could once again become a safe haven for al-Qaeda and others determined to harm our nation. America's plan for ensuring security within Afghanistan is to build up the capacity of the Afghan national security forces. So far, the United States has spent more than $54 billion over half of the total reconstruction effort on that purpose to train and equip the Afghan national security forces. I am pleased to note that we have come a long way in this effort. The Afghan national security forces, or ANSF, have assumed the lead for providing security throughout most of Afghanistan. They now work hand-in-hand with U.S. and coalition troops to hunt down terrorists throughout the country. In addition, ANSF special forces have made impressive strides toward becoming a fully independent and effective force. However, the audits by the DODIG, GAO, and CIGAR have identified multiple problems the United States must address to make sure the Afghan army and police are ready for 2015. CIGAR has found police buildings turned over to the Afghans that sit empty. A lack of trained personnel capable of conducting basic operation and maintenance for the nearly 900 buildings that we are going to turn over to the Afghan national security forces. And a Ministry of Defense that's not even capable to purchase fuel and provide it to the troops and the police in the field. Because of CIGAR's ongoing concerns with the ANSF, CIGAR is building a body of work to eventually answer the ultimate question, are the Afghan national security forces ready? To help answer this question, CIGAR has an ongoing audit looking into the reliability, accuracy, and usability of reported numbers for the security forces. We are very concerned because the ANSF were supposed to achieve an end strength of 352,000 troops by last October. However, as we reported last week, the ANSF has fallen short of its staffing goals. The number of troops ready for duty is even lower than what we have thought when you consider AWOL employees, civilian employees, desertions, and ghost employees. We also have concerns about the accuracy of those numbers. The Defense Department told us that there is no way for them to validate the ANSF's personnel numbers. These are often derived from reports prepared by hand by Afghan troops. It is hard to know if the Afghan army and police are ready if we don't know how many there are. We need accurate troop numbers in part because the United States uses these figures to pay ANSF salaries, to pay for the weapons, to pay for the food, and to the other equipment and so forth. We must know what we're paying for or we expose ourselves to potential fraud, waste, and abuse. Now, every Afghan expert I have spoken to agrees we need to ensure security or else everything we are trying to do will fall apart. That is why CIGAR will remain focused on this key pillar of the US mission, especially as the ANSF begins to stand on their own. Next, let's look at the economic transition. Afghanistan's economy has improved since 2002. That is quite clear. But the country is exceptionally poor. Its GDP per person is about $540 per year. And Afghan's fiscal sustainability ratio, which is the domestic revenues versus operating expenses, is one of the lowest in the world. The International Monetary Fund recently released a report about the looming budget crisis in Afghanistan, explaining that it is partly caused by widespread tax evasion and theft of customs revenue. They noted that the Afghan government can't even cover half of the country's current budget and is years away from being able to pay its own way. We need to face up to this stark reality. The Afghan government currently raises about $2 billion a year in revenue. Yet it may eventually cost up to $10 billion a year to sustain everything the international community has helped build over the last decade. CIGAR is carefully studying this problem by focusing on Afghanistan's efforts to raise revenue, primarily through taxes and customs duties. We will issue a report next week that examines taxes that the Afghan government may be ironically inappropriately and illegally collecting and assessing on U.S. businesses. I guarantee this report will be compelling. And it is going to be of interest on the Hill, in the press, in our contracting community as well as in Afghanistan. CIGAR's auditors and analysts have also looked at USAID and the U.S. Customs and Border Protection Agency's efforts to help the Afghans generate revenue at the borders, which is one of their main areas to generate revenue. Unfortunately, Afghans have struggled with corruption at customs and duty offices. Some customs offices reportedly lose up to 70% of their revenue, potential revenue I should say, due to corruption every year. And last fall, CIGAR found that cash counters installed at the Kabul International Airport to help prevent illegal money laundering were still not being properly used. In fact, passengers designated by the Afghan government as very important persons, VIPs, could bypass the currency controls altogether. The Afghans have even created a VVIP lounge for government officials to avoid this inconvenience. U.S. Department of Homeland Security officials have told CIGAR recently that ask Afghan customs officials readily admit they would experience repercussions, to say the least, if they instituted real cash controls at the Kabul Airport. During my next trip to Afghanistan, I had hoped to visit all of the major border crossings to personally examine U.S. and Afghan efforts to combat illegal activity at the border and collect revenue. Unfortunately, due to security issues, it may not be possible for me to visit all of them. Which in itself is a stark reminder of the tenuous hold we have on security in the countryside outside of Kabul. Ultimately, unless the Afghan government raises more revenue, the U.S. mission will be at risk. So until I see otherwise, I will remain deeply concerned that we need to see more progress from the Afghan government on corruption connected to taxes and customs. Now the economic transition goes hand in hand with the political transition. Helping Afghans build a stable, representative government capable of providing basic services is a core goal and has been a core goal of the United States reconstruction effort for ten years. The next milestone in Afghanistan's political evolution will be the presidential election set for 2014 and then the parliamentary election in 2015. The stakes are high. If either of these elections go badly, the impacts could damage the Afghan's legitimacy, incite ethnic and tribal tensions, and inflict a devastating blow on the chances for political settlement to the Afghan conflict. Now USAID has provided approximately $179 million to help Afghanistan prepare for these elections. But there are troubling signs that more oversight is needed. For example, SIGAR's latest quarterly report to Congress warns that the Afghan parliament has made no changes to the country's electoral law, and those changes are needed to avoid the serious allegations of ballot box stuffing and other voter fraud encountered during the last elections. And recently the head of the Independent Election Commission has warned that it will be unable to identify counterfeit ID cards. Unless we fix these problems before the 2014 presidential election, the Afghan people may have powerful reasons to question the results. Now, regardless of who wins the election, the U.S. needs to place more pressure on Afghan leaders to combat corruption inside their government. Corruption in Afghanistan is absolutely corrosive, eating away at its reputation in the world, and more importantly at the faith of the Afghan people in their government leaders, programs, and peoples. According to Transparency International, Afghanistan is perceived as having the worst public corruption in the world, tied for last place with North Korea and Somalia. And according to the United Nations, half of the Afghan population pays a bribe when requesting public service. Some experts have recently described Afghanistan as nothing other than a vertically integrated criminal patronage network, stretching from the lowest civil servant to the highest levels of government. Now, SIGAR itself, my organization, has had much experience battling against this criminal patronage network. For example, I'm very proud that our little agency was the first, and as far as I know, the only U.S. law enforcement agency that has actually proceeded with an in-rem action in Afghanistan. Now, for those of you who are not lawyers or prosecutors, let me briefly explain what that meant. What it meant in this case is that we identified $50 million stolen from the United States Treasury, and it was sitting in an Afghan bank account. We identified the bank account, we obtained a court order in the United States, and had it served on the Afghan government to get them to seize that money. For months, we pressed the Afghan Attorney General's Office and the Ministry of Foreign Affairs to freeze the account and begin the legal process to allow us to seize that cash. At first, we were told the bank account was frozen, and the money was protected. Unfortunately, as too many times it is the case, a few weeks ago, we learned that the money was mysteriously unfrozen by some powerful, unnamed bureaucrat in Kabul. Now, most of the money is gone. Now, we will continue to try to find that money, and we will continue to try to prosecute the individuals who were involved in stealing the money. And we will continue to work with honest Afghan officials. But, I fear our recent experience with this case and others may be the future for rule of law in Afghanistan, unless we, the United States government, make fighting corruption a priority for the Afghans, and we hold their feet to the fire to do what they have promised to do repeatedly in international agreements. For example, at the July 2012 International Donors Conference in Tokyo, the Afghan government agreed to combat corruption. Any international donor community said the Afghan government must demonstrate a commitment to deterring corruption to continue receiving international assistance. Now, it is the responsibility of the U.S. officials to hold the Afghan government accountable to these commitments. We cannot back away from this responsibility. We need to have the courage to withhold funding if progress is not made by the Afghan government as promised. During my upcoming trip to Afghanistan, I will once again put U.S. agencies on notice that both Congress and the American taxpayers need to see concrete steps by the Afghan government to combat corruption and to improve governance. If this is not done quickly, I fear we run the risk of the loss of U.S. taxpayer and U.S. congressional and the international community's support for continued reconstruction. The U.S. must also remember that it plays a role itself in combating corruption by policing its own actions in Afghanistan. The U.S. government must embrace transparency and hold its own contractors accountable for poor performance and criminal acts, and they must ensure that our contracting dollars do not go to terrorists or warlords who work with the terrorists. Now, this brings me to the final pillar of the transition, the shift to increase direct assistance. Now, before 2010, the United States provided most of our assistance to Afghanistan through contracts, grants, and cooperative agreements. These have been executed outside of the Afghan budget and for the most part beyond the reach of potentially corrupt Afghan officials. But that is changing. At the Tokyo Conference again in July 2012, the international community, including the United States, agreed to provide more than $16 billion in foreign aid through 2015. And they also promised to give 50% of that money as direct assistance. During President Karzai's subsequent visit to the United States, excuse me, he apparently received assurances of more direct assistance, including a promise by USAID to transfer assistance for the construction of the third turbine of the famous Kajaki Dam hydroelectric plant, excuse me, directly to the Afghans. Now, direct assistance, sometimes called government-to-government assistance, is development aid deposited in a host country's national budget. This assistance can be delivered through multinational trust funds or through bilateral agreements. The host country controls the money. It can be used to support every aspect of a developing country's budget, from paying civil servant salaries to constructing new schools and clinics. Now, despite what some say, I and my agency do not oppose direct assistance. It's not our call. If the government decides to do it, it has to be done. It actually has many potential benefits. For example, studies suggest that direct assistance may have a larger positive impact on a developing country's economy, because more of the funds stay in the country rather than going to large foreign contractors. It also helps the host government learn how to carry out the work on its own rather than depending on foreign contractors. But despite its potential benefits, I have two major concerns as an inspector general about direct assistance. First, we have to ensure that the Afghan government has the capability to manage and account for the billions of dollars that will come to it as direct assistance. That makes common sense. The second concern I have is we have to make certain that the direct assistance is not in any way perverted by the endemic corruption that has been identified by everyone who has studied Afghanistan. And we have to ensure that to make certain that the money gets to its intended purpose. Now, capacity problems haunt even the best ministries in Afghanistan. For example, you say it frequently cites to us the Afghan electrical company, referred to as DABS, as one of the most capable ministries for the transition to direct assistance. And it very well may be. But SIGAR's audits work would say otherwise. We found that despite improvements, DABS continues to depend on subsidies to survive and requires technical assistance to install equipment paid for by the United States. SIGAR's concerns about the capacity of the other ministries were heightened by our recent discovery that USAID completed capability assessments of 13 Afghan ministries scheduled to receive direct assistance. A preliminary review of these assessments raised some concerns. For example, one of the assessed ministries had questionable costs that exceeded the ministry's entire budget. Its staff lacked minimal procurement training, minimal contracting training. And it had no specific mechanism to check that its beneficiaries were not terrorists. Now, I'm pleased, as the Inspector General, that USAID would conduct these ministerial assessments. But as I recently told a number of senior USAID officials in Washington, this is only the first step to protecting U.S. taxpayers from potential fraud, waste and abuse. The second step is for USAID to use these assessments to create effective safeguards based on the weaknesses they identified. And more importantly, USAID must be willing to stop funding Afghan ministries if they do not live up to those safeguards. I believe those safeguards should be built on a foundation of transparency. But I have some serious concerns on that front. SIGAR has obtained emails from USAID officials and has been told by USAID officials that the Afghan ministries had the right to redact any part of those ministerial assessments they didn't like before sharing those assessments with my office, with the American taxpayer and with Congress. Now remember, these are ministerial assessments required by the Appropriations Act to be done by USAID. These are ministerial assessments paid for by the U.S. taxpayer dealing with U.S. taxpayer money going to the ministries. How can we hold the Afghan ministries to tough internal control standards if USAID starts off by letting them hide serious problems from both the American and the Afghan public? Now I recently reminded the USAID officials that they must recognize that they are negotiating from a position of strength. Remember, we, the United States government, is giving the Afghans the money. We are in a position before we cut the check and deliver it to insist on attaching strings to that money. Strings that should bind the Afghans to strong internal controls and U.S. government oversight on how U.S. taxpayer money is spent. For these reasons, SIGAR is conducting a careful review of those assessments to determine the situation in each of those ministries. And also, we're doing a very detailed assessment on what USAID is doing, if anything, with those assessments. Now, I talked about corruption as a serious problem. It's a serious problem before direct assistance, and it has to be considered. Both SIGAR, the State Department, and other agencies of the government have found that Afghan officials remain reluctant to prosecute corrupt Afghan government employees, especially if they are high-ranking and well-connected. So it's clear that any direct assistance must be accompanied by mechanisms established by the United States and other donors to provide independent and effective oversight over those funds. This is essential if we hope to ensure that the funds passing through the Afghan ministries go to the most qualified contractors and not the corrupt cronies of some Afghan official. Funding should be conditioned not just on meeting measurable outcomes, but on providing the United States and international donors unfettered and timely access to relevant documents, employees, and records, and most importantly, access to the projects and programs financed by U.S. assistance. Now, managing all four of these transitions that I described today, security, economic, political, and direct assistance, will not be easy. Despite everyone's best efforts in Afghanistan, SIGAR will undoubtedly find problems that must be addressed. Nevertheless, they must be the main focus of our efforts for the next 18 months if we want success to occur. Now, in closing, I think it's important for me to add something here for the public record about my role and the role of an independent inspector general. Since my appointment last summer by President Obama, I have been surprised to learn how many people both in and out of government do not understand the role of an independent inspector general. Over the last 10 months, I have been criticized by some bureaucrats for not pre-clearing my press releases with them, for not letting them edit the titles of my audits. For talking too much to Congress. For talking too much to press. For talking too much to people like you. And basically for not being quote-unquote a team player and undermining our country's mission in Afghanistan, quote-unquote. Many in our government, many senior officials who you think would know better, seem to believe that an inspector general should be their partner. But more correctly, their silent partner. In their opinion, my reports should be slipped in a sealed envelope and the dead of night under the door never to see the light of day. Because those reports could embarrass the administration, embarrass President Karzai, embarrass Afghanistan. Now, to their surprise, I will announce today like I have done on numerous occasions, I support the mission in Afghanistan. Otherwise, I would not have taken the offer from the President when given to me. That is why I accepted the appointment. We must defeat the terrorists hiding in Afghanistan and build up an Afghan government capable of ensuring that Afghanistan will never again become a safe haven for those who want to harm the United States. But I also believe just as passionately, maybe even more passionately, that for the mission to succeed we must conduct independent and robust oversight. Oversight that will bring about needed change and improvements. Oversight that gets the attention of the American people. Oversight that gets the attention of Congress and helps ensure that the problems we identify are addressed and not swept under the rug and ignored. Like so many reports I have seen in the past and probably you have. Great reports, great studies, and they end up in the circular file. Now, I am not a cheerleader. I'm a watchdog. It is my job to point out what isn't working so it can be fixed to do it any other way as just to muddle through. Too many Americans have been killed and wounded in Afghanistan and too much taxpayer money has been spent to simply accept the status quo. I've spent over three decades here in Washington working in and around the government including over two decades working on Capitol Hill as an investigator. And I have learned, if I have learned anything over those 30 years, it is this. Nothing gets done in this town. No reform occurs if you don't generate support from the American people and the Hill. And you can't generate that support unless you use the vehicle of the press and public disclosure with institutions and subject matter experts such as yourself here at the New America Foundation. So I can assure you today that CIGAR will continue to work in a transparent manner to ensure that the truth is heard before it is too late to fix our mistakes. We don't have decades to get it right in Afghanistan. We only have a few years. Now there are touchstones in history that can help guide us through the challenges we now face. I'm especially inspired maybe because I'm a history buff by the words of Abraham Lincoln in his second address to Congress delivered in 1862. Civil war was not even a year old. Outcome was far from certain. Lincoln told Congress that the question confronting the nation at that time was not, can any of us imagine better? The question was really, can we all do better? He said we must think anew and act anew. Ladies and gentlemen, those words ring true today, as true today as they did when they were spoken. They speak to the war in Afghanistan just as they did 150 years ago in our civil war. We must recognize that although there have been successes in Afghanistan, there have also been mistakes. We must be honest about that. There have been programs that have been poorly run and managed. There are things we could have done better. We must be honest about that and not drown out needed reform and new ideas with a lot of happy talk and rosy press releases. We are not going to win that war nor succeed in reconstruction by coming up with a better public relations campaign. It is time for our country to think anew and act anew in Afghanistan when it comes to reconstruction. Cigar is ready, willing, able to do so. And we will dose do so with honest and vigorous oversight. I hope we can also rely on your help in this ongoing challenge. The alternatives are simply not acceptable. Not to us, not to our allies, and certainly not to the Afghan people. Thank you very much. Thank you very much. Thank you very much, sir. I was intrigued by the 179 million figure that you mentioned for the presidential and parliamentary elections. And I was wondering two questions. Can you give us a sense what that money is, how it's been allocated between the two elections? Obviously, I think presidential election seems more important. And is there much consideration of the fact that there's unlikely to be a winner in the first round? It seems the Afghan electoral system, you have to get more than 50% of the vote. I don't see a candidate who will get that in the first round. So you're really talking about a whole other election, a runoff election, which there doesn't seem to be much discussion of both as a security issue. You'll have to, you know, it's a countrywide election that you'll have to run again. You can't do it two weeks later, I don't think. It would have to be several months later. So I wanted you to sort of discuss what you, how you see this playing out and how the money has been spent to make this a relatively free-in-fire. Well, you know, I have to be very honest with you. We operate in Afghanistan, but we also coordinate our work with the other IGs in the general accounting office. So we sort of divide the world, as you must say. We came up with a strategy where what are the key issues and who's going to do what. The USAID IG is doing most of the work in that area. We have a very supportive role. I know they have been doing some work, they have some audits ongoing, but I can't really answer the question on how that money is being split and how they're looking at it. But that is, you know, it was reported to us for our quarterly report, because we have to discuss governance issue as we got into it. I can't really answer you on how they're dividing it up and how it's going to turn out. Okay. You know, one of the interesting things on the ANSF which you began your discussion with is the desertion rate. And last time I checked, it's 27%. So you don't have to be a mathematician to recognize that it won't exist. If you keep up that rate of, is there anything that can be done about that? Or is there, you know, I know it's a little bit outside your purview, but why is the desertion rate so high? Do you have a... You know, I don't have an answer to that. I think the issue that we've seen on desertion rate goes to the recruitment. You know, you're recruiting people, you're giving them a salary, sometimes you're giving them a gun and then they disappear. There has been some talk because of the issue with the internal threat that some of the people who have been recruited in the past have actually had no intention to serve. I could explain why they came in, took the money and left. Part of that desertion rate when this is why we're very interested in it is we don't know how much of that is an actual desertion rate or is it just a scheme to skim revenue. Because remember, you recruit 100 people, we will pay for 100 salaries and we will pay for 100 uniforms and 100 guns and the fuel and everything. It's like the old Soviet system where it's a planned economy. It reminds me of work done in the past on the cotton crop in Uzbekistan. I know somebody who's done a lot of work in that area and how the Soviet Union used to spend all this money for the cotton crop and it turned out that 30 or 40% of it never existed but the money was still taken by the former Soviet bureaucrats including, I think, Brezhnev's son-in-law in Afghanistan. Not in Afghanistan, it was Uzbekistan. So that's the same issue that could be going on here. So that's interesting because that would explain because this desertion rate is very... It's phenomenal. Again, I don't know what life is like as an Afghan recruit. It may not be that interesting or exciting or once you get there you realize it's not your cup of tea. So the 352,000 is the number for the Afghan National Security Forces and that's the number that's going to be... Initially there was an idea that it would be drawn down but now there seems to be a decision that we're going to maintain that number. So what do you think the real number is? That I don't know and that's what our audit is going to find out. What we do know as DOD has been very honest saying they can't confirm the number. So they get this number from the Afghans and they don't confirm and that raises to some extent the security issue. We didn't really talk about that but what is the impact on the security or lack thereof on U.S. people getting out to verify things. So some of these Afghan military bases it's very difficult to get into now because there's no U.S. presence. But you know kind of balance against that in a sort of more optimistic sense is the fact that you said that when you opened your remarks there that the ANSF does seem to be in the lead now and is doing sort of okay. Yes, the big question will be as I'm told and again I'm not an expert on military affairs but this fighting season will be a critical fighting season and see how they hold up this year. The World Bank moving to the economics just to go into the order that you took. I was struck by the fact that the World Bank assessed that the Afghan economy is only going to grow at 5 to 6 percent which is obviously faster than we're growing in the next few years down from 9 percent. That seems like a very high figure. On the other hand the World Bank seems to have done a pretty rigorous assessment. I mean do you share that kind of view of the Afghan economy basically doing sort of okay? Well the big question will be again going back to governance and security. There have been some successes. If the security deteriorates the economy will deteriorate and obviously there'll be some deterioration from the fact that as we draw down on our troops there's going to be less money coming in our way although that can be offset with the fact that if we do go to direct assistance maybe more money will be spent in the country. So I can't really comment way when I haven't rigorously looked at how the World Bank came up with statistics but I think the key we want to ensure is that whatever gains we have made and whatever gains the Afghans have made we don't lose it if the security goes bad and they can't sustain their economy as a result. And that's why the election seems to me that if the election goes sort of okay a lot of these other issues will be resolved because the election in a sense is a sort of form of reconciliation process if it went reasonably well where everybody felt they had a seat at the table and then the economic and security situation I think will improve if the politics looks like it's going okay. But if the election doesn't go okay then I think we're in a whole different realm. I think you're absolutely correct that's why it's important for us as we talk about this transition that we get the election right and more importantly the Afghans get the election right. Right. You mentioned that you're going to this intriguing thing about the Afghan government picking actually taxing American companies in a way which might be illegal. Do you want to expand on that? I probably want to wait a little bit. Next week the audit will be out and a lot of people are waiting for that. I can just say that it's based upon complaints that we received numerous complaints we received from US contractors and we've heard that our other international organizations or countries operating there they've received complaints about their contractors being taxed. There are numerous agreements in place which would indicate that they should not be taxed and that's what's causing a lot of the confusion right now. I mean as a sort of general principle what's wrong with the Afghan government taxing companies that are doing business in their country. I mean if I was a German company doing business here presumably I'd have to pay American taxes. Well if you're doing business here you're doing business here but if you were the German government giving us money or building a road for us there are usually agreements, international agreements that you know it's kind of a when you really think of it here we're paying money and we're giving it to you the Afghan government and then on top of the assistance you're taxing us for giving you the money. I think that's the problem here. So it's not like it's a company, we're not worried about a US company selling cellular phones there. We're talking about an AID contractor, a DOD contractor who's working on US assistance and in addition there were agreements in the SOFA status of forces agreement or other international agreements where you wouldn't tax it and normally you wouldn't tax reconstruction aid. One interesting question and this may be impossible to answer but do you have a sense of how much money, when we give money to the Afghans often we, and you've indicated this a little bit in your remarks in a sense we're sort of paying ourselves in many ways right. So we're paying our own salaries and paying for you know benefits. So it's not as simple as us just giving 54 billion to the Afghan people much of that money is repatriated to the United States. Have you ever looked at like what that level is because I understand that countries like Sweden go out of their way to kind of give as much money as possible to not to basically just pay for Swedish salaries and the United States doesn't really come out that well in that comparison. We haven't looked at that specifically. I think there have been studies done by the World Bank or the UN on the amount of money that, and I alluded to that, the amount of money that stays in the country. Direct assistance versus contracting off budget which it's called which would be if USAID or DOD hires an American or a foreign contractor to do the work that's off budget. And I think there have been studies saying that there's more money that stays in the country but I haven't looked at it directly. Our concern and just to keep in mind and I hope I articulated this correctly is our concern is whether it's direct assistance or off budget assistance. If the money is being stolen or the money is being wasted whether it's by a U.S. contractor here in Northern Virginia or a Afghan official in Afghanistan, that's wrong. And it's my job to stop that because what that means is less money, that's taxpayers' money that's being wasted. So I am equally concerned about waste whether it's in Northern Virginia or Afghanistan. I don't mean to pick on my Virginia, Northern Virginia brethren but everybody talks about the Beltway and the Northern Virginia. It's waste that I deal with, you know, fraud, waste and abuse. If we find it we will try to highlight it. And I'm concerned that if 80% of the money or 70% or whatever the figure is is being spent here in the United States and isn't helping the Afghans and is not being used, you know, that's a concern to us. Is there, I mean, are there, you mentioned this electricity dams. Are there other ministries that you think are doing better than others in terms of, I mean, is the Ministry of Foreign Affairs doing better or are there other kind of bright spots that you can point to? You know, I haven't looked that closely. That's why we have the assessment team. There are certain ministries which are better than others. The 13 that we looked at or looking at, they all have serious problems. And I can't rattle off the 13 that they're listed in the court of the report. And that doesn't even include the Ministry of Interior and Ministry of Defense. They too have problems. Now, AID hasn't done an assessment on them but we're looking at them also. What are the main problems that you find in these ministries? I mean, bearing with all the usual caveats that Afghanistan has. Well, a lot has to do with training. A lot has to do with the capability to manage, safely manage large sums of money. The ability to contract. Even the Afghan Parliament complained a few weeks ago and I think there was in the Afghan press that they're upset that the Afghan ministries themselves don't know how to contract. And a lot of their own money is not being contracted out. You know, it's not easy to contract. I mean, we're slow too in getting our contract dollars out. What type of safe controls do you have? Do you have controls over two people signing a check? Your typical controls you would have in any institution to make certain the money is not wasted. So, those are the kinds of problems that we're seeing. Now, you have to realize that we have been spending money, a great amount of money over the last 10 years supposedly building that capability. So, it's concerned to us that this late in the game we have assessments and they look like they're pretty good assessments and they're saying, well, we didn't really accomplish much in the past on trying to build that capability. Right. One final question before we throw it over to the audience. You mentioned this interesting thing about contracts which inadvertently or for one region or another end up in the Taliban because they're basically trucking companies that are paying protection to bring it in. Brigadier McMaster was appointed by General Petraeus to set up the unit and particularly to look at this issue and I think it was John Tierney who had big congressional investigations and that was I think in a sort of 09 timeframe. I'm presuming that this problem has, which was a very big problem has been somewhat the handles being gotten onto this where we were effectively US dollars were actually going to the Taliban in some large sum. I'm not absolutely, I wouldn't be let's say as sanguine as you are that has been fixed. We see that problem throughout and when I go there, one of the reasons I go there is to talk to some of the people, particularly those outside of Kabul and they tell me what's going on. There are still serious problems about money being diverted and I think there's still your concerns about money still being diverted to insurgents. How do you prevent that? Because there's a natural, of course if you're building a road you do want the road to be protected and you can see why it happens. How do you stop it? Well you do some due diligence. We do have an organization called the CIA and the Intel organizations which have been in the press recently. They help, they should be helping our contracting officers on identifying who are good guys and who are bad guys and then once you identify if they're good guys or bad guys then you prevent them from getting contracts. Now we just did an audit that came out and it's mentioned in the court of the report called contracting with the enemy. I think section 841 of the National Defense Authorization Act of whatever year. Which basically gave the authority to the theater commanders to bar contracting with the enemy. What we were finding out is we were actually contracting with the Taliban. They had their own company. It was a Taliban cement company or... It was something like that, Joe's cement company or whatever. And so Congress got a little miffed about that and I can understand why. So they set up this process and we analyzed it and it's a good step. We also have our own debarment and suspension program and I can proudly say that my little organization of 200 people I think we have the most aggressive suspension and debarment program out there. We were trying to suspend and debar people not just for bad contracting but for also being bad guys, for being part of the insurgents. And we've had problems with that because we can't actually suspend and debar them. I remember having a frank conversation with General Allen and he totally supported us having suspension and debarment authority. And that went up through the chain of command and Southern Command supported it. But unfortunately we didn't get that authority. But I think you're on to something. I think it's a serious problem. There are ways to address it. It's not an easy problem. I just don't think it's been addressed yet. I have a concern when I go and talk to the people in Task Force 2010 and I talk to the generals out there. Great. We'll throw it up into questions. If you have a question, please wait for the microphone. Identify yourself and we'll start with this gentleman over here. Thank you. Good presentation. My name is Doug Brooks. I'm an independent consultant now but I'm with the Afghan-American Chamber of Commerce and before that I ran the ISOI, the International Stability Operations Association. My question is really on the direct, foreign direct investment that's going into Afghanistan now. Do we see much investment going in? Do we see foreign companies interested in investing in Afghanistan? And do we think this World Bank prediction of 5% growth is going to continue after 2014? Yeah. We are seeing some international investment, not as much as I think the Afghans would like or as our government would like. And I think you really hit on something. Success in Afghanistan is not going to be the result of just pouring more foreign aid in. Success in Afghanistan is going to be investment. It's going to have to be the private sector develops. You're going to have to develop the jobs. You're going to have to develop the industry there. And you're going to need some foreign investment. I don't think there's enough. That's my personal opinion. We haven't done an audit on that. But talking to people out there, that's the future. And I think you've really hit on the head. And again, this goes back to the election issue, the security issue, the stability of the country. Investors are not going to go in there if they're worried about the election. Investors are not going to go there if they're worried about the ANSF collapsing. Investors are not going to go there if there's no rule of law. We've learned that before. And that's why it is a key that in these transitions, we get that right. And if we have to hold the Afghans feet to the fire, it's tough love in a way. You got to make certain they realize that we're not going to be here for 20 or 30 years. I mean, the reality of the situation, I heard somebody the other day from one government agency, maybe you say it's saying, you know, we're in here for the long run, 20, 30, 40 years. Well, I mean, my humble opinion, at what point do you stop? At what point do you think the American taxpayer is going to say, well now we've been there for 900 years. Do you think maybe we, I mean, in all seriousness, we have spent more money on Afghanistan than we have spent on any other country in the world? Okay? Even Germany post World War II. Right now, this year, we are spending twice as much on Afghanistan than we do on the next four countries combined. Iraq, Israel, Pakistan and Egypt. Yeah, twice as much. At what point, and I just throw this out, at what point do you think the American Congress and the American taxpayers are saying, well now it's year 25 of this, it's the second decade or third, remember we've been doing this for 10 years. At what point do you think it's going to run? That's why there's an urgency, guys, let's focus on the problem now. We may not have the taxpayer may say, look it, and you understand that, I mean, I go to the Hill all the time. And I don't see much support up there for continued foreign aid. Is there any support? I mean, I mean. Honest to God, I spoke, I testified before the House Oversight and Government Reform Committee a couple of weeks ago. And there are 22 members, one of my staffers counted, and every one of them came in and said, why are we doing this? What's your answer to that? I think we have to be honest to the American people in Congress. I think you say, state, DOD have to say, look it, we've made some mistakes, we've have some great progress. We don't want to blow it now. You have to be honest. When I go up and talk to staffers, staffers, their biggest complaint is, no one's leveling with me. Don't tell me it's all happy time, it's happy news. It isn't. But I think the American people can take bad news. But the opposite point is also surely that, I mean, you're not advocating sort of stopping aid at all, right? I mean, you're also there as an advocate for the mission. As I said, I believe in the mission. But I believe in a mission that's done correctly. I believe in a mission that doesn't end up just diverting the money to some warlord or terrorist or to Dubai. My mission is, the taxpayers' dollars, our mission is to ensure that Afghanistan does not become a haven for people who want to kill Americans. I mean, that's what the president annunciated it. That's the mission. And we are doing assistance there with that mission in mind. And so I view every dollar spent as it supports that mission. And part of that is governance. Part of that is education. Part of that is making certain that the Afghan people support their central government. But it's got to be right. Yeah. Down here, Annie? Thank you. Just one of these two people here. Thanks. Hi, I'm Jeffrey Lin from Senator Angus King's office. I was wondering that, well, we're obviously not the only people doing development aid and reconstruction Afghanistan. So I was wondering if the other, well, the other foreign actors in Afghanistan also shared the same level of concern on priorities and how they're cooperating with SIGAR and the rest of the U.S. oversight agents bodies on making sure that the aid is being properly spent. And that the Afghan people and also people abroad like the U.S. public are receiving transparency and accountability, because obviously some of these countries, this might not be the first priority to be blunt about it. Let me try to answer that question as best I can. I have jurisdiction only over the U.S., so I spend most of my time talking to U.S. officials and experts here. But I do talk to and have learned a bit about other foreign countries, foreign assistance programs over there. Some are better, some worse. What I hear, and again this is not, we haven't done an audit or inspection or anything, this is more anecdotal, is that some of their programs are better. But they have a weariness too of assistance. Now, so I can't speak for that, I can't see what the, you know, I don't know what the Europeans are going to do, I don't know what the Norwegians are going to do or whatever. But there is a big presence there, the Japanese have a big presence there, a lot of countries helping, which is great. The other part of your question has to do with coordination I think. And that is something that I do have authority over and we do look at. And I'll be quite honest, it's not good news. One of the things we keep saying is nobody's in charge. And that's why if you go back to my January quarterly report where I laid out seven questions. And the seven questions if you want to succeed in Afghanistan and one was, do we coordinate with the Afghans, which turns out a lot of times we don't talk to them before we give them a bridge of school or a dam. Do we coordinate internally, many times USAID does not know what the DOD is doing, does not know what the SERP program is doing, does not know what the Corps of Engineers are doing and likewise. And we don't coordinate with the international community. So we did an audit looking at, again going back to DABS and it was something that the Asian Development Bank had a program and we totally ignored and never talked to the ADB on one of these energy programs. So what I hear repeatedly and I don't know who's at fault is that there is a coordination gap among the international community. And I have heard people criticizing the Japanese and the Europeans and I've heard the Europeans criticizing us so I don't know who's right. But we do need to get that coordinated. This lady here. Thank you for your presentation and for your passion and commitment to the work. I'm Deborah Alexander and I've just left Afghanistan. I was there for about nine years. And the question that I have for you is you're absolutely right. You've alluded to the fact that we've been talking about capacity building, about governance, about anti-corruption really since even early part of the mission in late 2002 we really started focusing on it. And so there have been a multitude of programs, mentoring, coaching, advisors assigned to the ministries and not only the US and all of our programs but as we were just talking about the UN, UNDP, its other affiliated agencies, other donors have also focused on anti-corruption and governance. So after 12 years we still don't have it right. My interest is what could we have done in 2002 and three and looking back what can we learn that we could have done then that we might not be in the place where we are now and continuing after 12 years to talk about the same problems. Thank you. I think that's an excellent question. I'm not going to try to dodge it but I will say we don't have an answer yet. I mean it's not over and it's one of the things that we're being asked to do by our statute. It's sort of lessons learned. What can we learn from our experience? That's something we're going to be working on. So I'm open to any suggestions, thoughts. You've been there for nine years. I talk to people all the time and I recognize I'm not the expert. My people aren't the experts. We're good at audits, investigations, inspections and I do have some subject matter experts. But we don't have the expertise of somebody like you who's been there nine years or somebody's been doing counter narcotics for 20 years or somebody's been in the military for 30 years such as yourself. So we call on people, that's why I love to talk to organizations such as this. I get people to come to me. We actually have what I call the cigar salon in which people come and talk to my staff totally off the record. Smart people come in and I want to extend an offer to you and anyone else who will help us understand the issues because we're going to have to do those capping reports, those reports that look at lessons learned. So it's not a dodge. I can't give the answer yet. There's been a lot of work done already and I don't want to ignore that. The War Contracting Commission did a lot of work on how do you do contracting and procurement in a kinetic environment. My sister agency, the CIGR, not to be confused with the CIGR, the Special Inspector General for Iraq Reconstruction, Stuart Bowen has done hundreds of reports. Some good, hard analysis and a number of people who have written about, I think there's a book that just came out recently on foreign assistance and he's taking pieces of various work. So that's something we're going to have to look at. We haven't done it yet. But what I will say, and that's why I came up with those seven questions, if we early on had started asking those seven questions. And these seven questions are really easy. And I want them to be easy. I didn't want something so convoluted that it reminded me of some of my econ courses when I was at the Wharton School, which I never understood and failed miserably. You know, does this program or does this project, and these questions should be asked before we start spending the money, does it meet our goals? It's like I always used to tell people, keep your eye on the prize. What is our national security or what is our nation's objective in Afghanistan? Does this program, does this project, does this dam, does this road, does it support it? If it does, great. If it doesn't, maybe you don't want to spend the money on that program. Do the Afghans want it and do they need it? You don't know how many programs we've seen and you'll see some in the quarterly report. We never ask the Afghans, do you want it or more importantly, do you need it? We just built a couple of hospitals that the budget for fuel, to power it, is like, you know, eight to ten times more. Bigger than the entire budget was of the prior hospital. So how in God's name are the Afghans going to be able to sustain it? Third question is, did we coordinate it internally among the U.S. and did we coordinate it with the international or our allies? Fourth thing, is it sustainable? Why build a clinic and give it to the Afghans if they can't sustain it? All we're doing is increasing their hopes and creating something that is just going to upset them. Do we, and it's also a waste of money, do we take in consideration and corruption and have we built safeguards to make certain the money isn't stolen? Do we also have measureable, we have measures of success and do we apply them? I don't know if I've got all seven, I think I've got six and I think I've forgot one. But they're laid out. So I would go back and say, if those type of questions were asked early on, once the fighting stopped and before we started pouring in the money, I think those may be the best lessons learned. So I just throw that in my humble opinion and again I'm not an expert on foreign assistance. I wasn't hired to do that, I do oversight. But I think if you did answer those questions. Now, let me just back up and this is something I told my friends at USAID and I told Congress. You may still want to do the program even though the answer to every one of those questions is no. And the reason is you're doing it for some other reason. An important national security reason, a political reason or whatever. But if you're going to do that, say it. We know this program is going to fail. We know it's not coordinated. But we're doing it because we need it to maybe get a certain organization or certain entity, a certain locale on board with the initiative. But at least say that and be honest with the appropriators and authorizers if you're in the executive branch and be honest with yourselves if you're in the executive branch, that's why you're doing it. It's very likely it's not going to succeed. I don't know if that answers your question or I hope I didn't dodge it, but yeah. Yeah, it is very tough. Lady? Hi, Stella Dawson from Thompson Reuters Foundation. I have a couple of questions. Firstly, if you could say if you've seen any improvements since the Anti-Corruption Commission has been working in Afghanistan. And then secondly, I was intrigued and wanted to ask you a little bit more about the assessments of the 13 Ministers. Have you seen those 13 assessments, the assessments that USAID has done? And have you also seen the versions after they've come back from Ministers which you allege were allowed to make their comments or redactions? Because it suggests that you seem to be suggesting that there's some essentially collusion between the USAID and the Ministers to hide something. Well, let me answer that question first. I'm not alleging collusion. I'm just an old prosecutor and investigator. I've been doing this for 30 years. If I'm a little suspicious, let's just say that. If somebody doesn't give me something or really fights and legally there's no reason for them not to give it to me, I'm always suspicious of that. I mean, that's because I'm an investigator at heart. The Ministers, let's so you understand, we have the complete assessments. Because when they initially said, we can't give them to you unless the Ministers redacted, I said, let me just show you my statute. I am empowered and it says by law, I get everything I ask for. If somebody withholds it, I make a determination that that withholding is unreasonable. I report it to the Secretary of Defense, the Secretary of State, and Congress. And amazingly, when you say that to somebody, usually you get the documents. So I got the documents. Congress didn't. Congress is still fighting, I think, to get the redacted versions. But I have not compared the redacted to the unredacted. So we have them and we're doing a preliminary review. We have auditors looking at them, but I just gave you sort of a preliminary taste of that. So I can't tell you exactly what was redacted and why it was redacted. But I think it was unreasonable to redact that. The American taxpayer is giving the money to the Afghan Ministries. The American taxpayer even paid for the assessment. The American taxpayer is paying for the AID official to do all this. So why doesn't the American taxpayer have the right to see it? And her question about the anti-corruption, I mean, is there a sense that things are getting better? I mean, the Kabul Bank, the word prosecutions, it's not. And I look at neighboring Pakistan where 2% of the population pay taxes. I can't compare it to Pakistan or to any other of the stands. But I'm not absolutely certain it is getting better. I've been there for 10 months, but I've talked to a lot of people. And just so you know, when I started 10 months ago, I did something that I did when I worked for Sam Nunn for 15 years. I went out and talked to all the experts. And that was the beauty of working for Sam Nunn, and I hope most of you know who he was. And a great statesman. And I would go out and that was the fun thing working for Sam. I would go out and talk to all the experts. And in this case, I talked not only to the experts, but I was told to talk to my clients. And my clients were, you know, aid, state, DOD, the Hill, the Department of Justice. Went out and talked to everybody. And to a man and woman. And these are the current ambassadors, the former ambassadors. The current head of SRAP, the former head of SRAP. You know, General Allen and many other generals. And here, and many people in the Pentagon. They all came back with, because I asked them a question at the end. I said, what keeps you awake at night? And every one of them had two answers. Security and corruption. Now that's as of 10 months ago. I keep going back and I keep talking to people. And everybody I talk to, they boil down to those two things. Or a variation. They add the election to it. They add the loss of the Afghan people. You know, they won't support the central government. But it all boils down to security and corruption. So they answer your question. The experts are telling me corruption is still a problem. Now, I've talked to the MEK, which is the organization I think alluded to by the questioner. And I think it's a fascinating, fantastic organization that was set up. It's an international plus an Afghan group that is looking at corruption. And they are risking their lives every day, I think, in speaking truth to power. And I will be meeting with them again. The commissioners are coming into town. Hopefully they will overlap with me. I think it's a fantastic group. But I don't know. And I'll find out from them. I'll ask them do they see things improving. They weren't too happy with the results of the Kabul Bank indictment or prosecutions. But I don't know the details. I've read their reports. So if they answer the question, I don't think things are getting better. It needs to be corruption. Mike Sponder. I was once in government. That's not important. But building on your last one, which is now 10 years, the word corruption. The dictionary says corruption is stealing money from the government. They're taking money from us. And we've been talking, those words have been around for the last 10 years. They'll be around for the next 20 years. If we haven't solved it 10 years ago, why do you think we're going to solve it 10 years from now? So why keep using the word corruption? They're just taking money from us. That's what it's simple. Based on your assessment of the two things that keep them up. But why is it keeping us up if we keep doing the same thing? Well, somebody wiser than me once said the definition of insanity is doing the same thing over and over again assuming you'll have a different result. So maybe I'm insane. Maybe we are all insane. Corruption is a problem. We've got to address it. That's my job. If you steal money from the US government, I arrest you. And then I turn you over to the Department of Justice. We're a law enforcement agency also. It's amazing. It scares the heck out of my wife. I actually can carry a gun, which I don't, God bless her. But we're law enforcement agencies. I've got 60 some people who carry weapons. So it's my job to find corruption. I think the problem of corruption and what keeps them up isn't so much it's stealing. It's stealing money from the US taxpayer. It's that the corruption will so upset the Afghan people that they will go to the bad guys. They will think to themselves, well, jeepers. It's just as bad as it was when the warlords are here. At least the Taliban had a rule of law. You know, it was Shahira, if I'm pronouncing the question. It's a vicious law, but at least the courts weren't corrupt. So maybe the insurgents are right. Maybe we shouldn't trust America. We shouldn't trust the foreigners. We shouldn't trust the central government. And I think that's what the big concern, and that's what was keeping General Allen and keeping the ambassadors awake, was that the corruption would be so bad that we would lose the hearts and minds of the Afghan people. And that will happen then with the election. They'll support the insurgents. The ANSF maybe that explains why the ANSF, some of the people desert because there's corruption included in that. So I think that's the major reason. I don't think the corruption is that, you know, obviously General Allen's upset that money's being stolen from the American till he's an honorable man. But I think it was more that concern. And that's why people keep talking about corruption. Great. Any other questions? Take this final question. Thank you. Thank you. My name is Russ Emery and I write for China Daily Mail. And thank you, Mr. Sofko, for presentation with a pulse. And I would like to ask your opinion on the outside investment, which is so important. Where would China approximately rank among the investors and is the ebbing of U.S. security an issue for China? If you know anything about it. Thank you. I can't really give you a good answer on that. I know Chinese concerns are very interested in some of the mineral rights, but I don't know how they would rate these of the other. I think they have a major interest in it, but I can't give you an answer on that. Actually, if you look at our quarterly report at the end, I think we may list. And just so you know about the quarterly report, one of the reasons why you should pick up a copy or go online if it's better is, unlike most inspector generals who basically just say how many people they indict and how many audits they did and that's it. We are required by statute to do the biggest data call on Afghanistan. We are than any other IG. We do a major data call in four or five areas dealing with governance, the economy, corruption, security and all that. And so we put a data call out to all government agencies and some international agencies to get information. So you should find a lot of information that may be useful to you in the back. I don't know if we discuss foreign investment there. If not, maybe I'll talk to my people and we'll do that. That's another nice thing of coming to think tanks like this. If the think tanks are my clients too, if what I create isn't useful to you, call me up. And if it's reasonable, it's legal, we'll put that data call out because we believe we support the American people. This is your book, the American People's Book. And it should be useful for every taxpayer to pick it up and say this is what we're doing in Afghanistan. Whether he's a student in a college or somebody doing a think tank or a government official. You don't know how many government officials actually call us up and say can you ask this question because I can't get it from the Department of Defense. Or you say it won't tell me. And those are actually people working in the Department of the Senate and you say it. So what I'm saying is people call us up to ask for information because they can't even get it internally. It's also the perfect Mother's Day present. Yes, and the price is right. Thank you very much. Thank you.